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Big Tobacco Pursues Non-Participating Manufacturer Tax in Texas

The major tobacco companies are again lobbying for legislation in Texas that would impose special taxes on small cigarette manufacturers that have not settled with the state for tobacco-related claims.

Texas is one of only four states that are not signatories to the 1998 tobacco Master Settlement Agreement (Minnesota, Mississippi and Florida are the others).  Those states separately settled their lawsuits against the major tobacco companies.  Minnesota and Mississippi have imposed special taxes on cigarettes made by non-signatories; Florida and Texas have not.

The major tobacco companies have pursued the special tax in Texas since at least 2004.  The major tobacco companies say that the legislation is needed for force the non-signatories to pay for the health care costs associated with smoking, even though the claims that prompted the Texas settlement have never been asserted against the smaller companies.  The Texas Comptroller’s Office has asserted that the legislation would raise revenue, although it may be unconstitutional as a disparate tax.

For questions and/or comments, please contact Bryan Haynes, Troutman Sanders Tobacco practice partner, at 804.697.1420 or by email.

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